Tuesday, December 04, 2018

US-China Trade War Truce: Two Reasons Why it's Unlikely to Last

By Jeffrey Kucik, University of Arizona

Image Attribute: U.S. President Trump and Chinese President Xi Jinping met for roughly 2.5 hours at the sidelines of the G-20 2018 summit, longer than anticipated / Source: AP

Presidents Donald Trump and Xi Jinping have agreed to a ceasefire in their increasingly painful trade war, yet their governments’ differing depictions of the deal shows just how far apart they really are.

While the Trump administration emphasized trade issues such as a 90-day moratorium on raising tariffs and Xi’s concession to buy “very substantial” amounts of U.S. goods, China focused on diplomacy, regional issues and an agreement to try to quickly resolve their differences.

As a political scientistfollowing the escalating tensions, I believe that the statements coming out of the G-20 meeting reveal that a wide gap still separates Xi and Trump, both in terms of what matters most to them and their approach to getting it.

Territory trumps trade

One of China’s major concerns is U.S. interference in areas it considers “internal” matters.

These sales irk China because they directly conflict with Beijing’s long-standing policy that there is only one Chinese government, and Taiwan is merely a breakaway province that will inevitably be reunited with the mainland.

Another sticking point is the South China Sea, where the Chinese government has been increasingly aggressive in asserting territorial claims at odds with its neighbors. In the past, the U.S. has acted as a counterweight to China’s claims, Now inconsistency in Trump’s stance has added to tensions in the region.

Both of these issues have implications for the trade war. China is willing to absorb economic losses in exchange for standing firm on issues vital to the national interest.

That’s precisely why China’s statement highlighted Trump’s apparent commitment to continue respecting the so-called "One China policy" – something not mentioned by the Americans. As it so often does, trade takes a back seat to the territory.

Taking the high road

China’s statement also placed greater emphasis on economic cooperation and restoring diplomatic relations, the kind of high-minded talk that for decades has been more typical of American presidents.

Specifically, China highlighted that the two leaders plan to visit each other’s countries at some point and that both sides would work toward scrapping all tariffs to reach a mutually beneficial, win-win agreement.

Contrast that with the U.S. statement, which focused more narrowly on the truce’s benefits for its side.

It’s another stark demonstration of the contrast between the two leaders on the global stage. Trump has been focused on putting “America first” andurgingother countries to also pursue economic nationalism. Meanwhile, Xi has cultivated an outward-looking posture that aims for cooperation and compromise, embracing the virtues of economic cooperation, free trade, andglobal leadership.

Ultimately, a meaningful, lasting deal is unlikely in the 90-day window. Quite apart from trade deficits or jobs, the trade war has grown to represent a deeper geopolitical rivalry. If Trump wants a win from this battle, he’ll need to understand that Xi won’t give in easily. And China’s leader will likely expect compromise on complex territorial issues like Taiwan or the South China Sea before the ceasefire will begin to look like a full-fledged peace accord.

With the two leaders’ approach to the world looking increasingly different, it’s likely that the G-20 truce will merely have paused the trade war – not stopped it.